Minneapolis, Minnesota – (The Hosting News) – December 1, 2006 – According to a new report by Tier1 Research, the mass-market webhosting sector – defined as the shared, VPS and standardized dedicated server segments, is changing, as broadband and multiple web presence possibilities for consumers and businesses expands.
Industry consolidation, IPOs, domain monetization models and license agreement lawsuits are helping to put a ‘face’ on the marketplace once again. These trends are also affecting market share – opening the door for new leaders, while the Web giants try to increase their leads over the mass-market sector. These findings are contained in a report released today by Minneapolis-based Tier1 Research (T1R), an independent research firm that analyzes the financial and industry implications of developments affecting public and private companies within the IT, communications and Internet sectors.
Philbert Shih, Research Analyst at T1R and lead author of the report explained, ”Raw shared hosting accounts remain under attack by functional services, and the principles of shared infrastructure continue to drive dedicated server hosters to consider virtualized service platforms. Meanwhile, online advertising successfully entered the sector, upsetting the revenue apple-cart of many leaders and opening the door for new leaders, yet leaving many to think the Web giants can own the mass-market sector. We believe the transformation taking place will present some significant challenges and opportunities in this sector.”
The 48-page report, titled ‘Mass Market Quarterly – IP, IPOs, M and A and URLs top the acronym soup that explains 3Q06 in the mass-market hosting sector,’ provides a market size/share review and comparison of companies in the mass-market hosting sector, defined as the shared, VPS and standardized dedicated server segments of the industry. The report includes discussion of the trends and challenges faced by this sector, revenue growth details, analysis of the segment leaders and a look at key M and A activity, as well as an examination of expectations and possible future directions this marketplace might take.
This report dives into the trends affecting the mass-market hosting sector, including:
- Industry consolidation explodes as expected after slow 1Q06: After a relatively quiet start to the year in M and A, several important transactions took place. Unlike in 1Q06, when M and A largely took place in the shared sector, 2Q06 and 3Q06 saw deals cut across various segments within the industry. The transactions were notably of a high-profile variety and have the potential to reshape many subsegments and international markets within the sector. T1R believes the consolidation trend will continue.
- Hosting firms file to go public: For the first time since the Internet bubble burst, a few mass-market Internet service firms filed to go public or completed public financings. Most notably, Go Daddy and Hostopia filed S-1 registrations for IPOs. However, weakness in the tech markets pushed Go Daddy to pull its filing. Despite many bumps in the road, T1R is optimistic that the sector has companies capable of existing as public entities in the near future.
- Shared hosting is under attack by functional hosters: Functional hosters are a direct threat to the shared hosting segment as customers look for efficient and low-cost services that meet the specific needs of their many online activities. T1R looks to hosters to build and market their services to compete against this trend.
- Is there IP in the hosting sector? Web.com reached an important patent licensing settlement with Hostopia that could have significant ramifications for the hosting industry. This could draw the interest of Google and Microsoft. Separately, IBM’s patent suit against Amazon could have implications for the hosting sector, too.
The report covers more than 25 key public and private companies in the mass-market hosting sector, including the following: Active24, Affinity Internet, Alabanza, Demand Media, eBay, Endurance International, Freenet, GeoTrust, GI Partners, Go Daddy, Google, Hostopia, Hostway, iPOWER, MelbourneIT, Microsoft, NetBenefit, Oversee.net, Rackspace, SWsoft, The Planet/EV1Servers, Tucows, United Internet, VeriSign, WebCentral, Web.com and Yahoo.
Tier1 Research analyzes the financial and industry implications of developments affecting public and private companies within the IT, communications and Internet sectors. Tier1 blends traditional Wall Street investment research with industry analysis to deliver dynamic market and financial intelligence. Clients include institutional investors and technology vendors, along with end users and venture capitalists. Clients leverage Tier1 Research’s analytical insight for idea generation, trend identification, due diligence and grounded opinions, as well as metrics and forecasts on companies and industries covered. Since its founding in August 2000, Tier1 Research’s coverage has spanned the largest publicly held technology companies as well as smaller, pioneering public and privately held companies.
To learn more, please visit: www.tier1research.com.